In practice, some lawyers believe that when a company intends to adopt employee handbook, they need to seek approval from the employees about the content of the employee handbook and then the employee handbook will become valid.
We would believe that is not a correct understanding about validity of an employee handbook. Article 4 of PRC Employment Contract Law(“ECL”) provide for requirements on validity of an employee handbook, which says the formulations, amendments and decisions made by employers with respect to rules on labor compensation, working hours, leave and rest, occupational safety and hygiene, insurance and welfare, training, work discipline or work quota management, etc., which have a direct impact on employees’ basic rights and interests, or other material matters, shall be presented to and discussed with the employee representative congress or all the employees, and the proposal and advice thereof shall be determined after consultation with the labor union or employee representative on the basis of equality.
We interpret Article 4 to mean that a company should first discuss and conduct consultation with the employees, employees’ representative or labor union about the employee handbook, and then determine the rules as stipulated in the employee handbook on the basis of equality. Article 4 only requires, in our opinion, the statutory procedure to adopt the employee handbook, namely, a company should first discuss and conduct consultation with the employees, employees’ representative or labor union about the employee handbook. Article 4 does not require the company to seek approval from the employee about the formulations, amendments and decisions of the employee handbook. What a company needs to do is to comply with the statutory procedure and then determine the employee handbook on the basis of equality.
The Shanghai Bureau of Human Resources and Social Security supports our opinion. They advise that the legislative purpose of article 4 is to weigh a company’s self-management and the employee’s basic rights and interests. As such, only if a company has gone through the statutory procedure as stipulated in Article 4 of ECL and the terms of the employee handbook do not violate the PRC laws, regulations or policy, then the employee handbook will become valid. Whether or not the employees agree with the terms of the employee handbook should not be the conditions for an employee handbook becoming effective.
By Adam Li